Perspectives James W. Walker, Editor This column addresses emerging trends and issues in the development and implementation of human resource strategies. Please respond with your views and experiences to firstname.lastname@example.org. Do We Need Succession Planning Any More? Over the years, I have sat through many meetings in which business unit executives presented their management succession plans to their peers and the CEO, discussing profiles of individual candidates identified as “ready now” or “ready in 2 – 5 years”. They were armed with binders or slides, providing charts on management talent and backup information on the strengths, weaknesses, and capabilities of individuals. Executives were expected to manage their talent pool and groom successors within their business units. Individuals were expected to have target jobs along career paths and plans for training and development. Discussions in the review meetings were typically polite, led by the CEO, and few changes were ever made in plans as a result of discussions. Later, when promotions were made, candidates from the plans were considered, and often selected, furthering a practice of promoting from within the company. Today, however, we are in a faster-pace environment. Executives often perceive that management succession planning is a tedious paperwork exercise that fails to produce candidates with the capabilities to lead required business change. A traditional planning and review process, however well documented, does not necessarily lead to needed results. More often than not, key assignments go to individuals other than those named as successors. The desire for new competencies and rapid business transformation often leads executives instead to unusual choices internally or external recruiting. Succession decisions made as vacancies occur are therefore addressed as make or buy choices (develop internally or recruit externally). Hence many executives ask, “Why should we try to groom talent when it is ever more difficult and when requirements are rapidly changing and uncertain? Why bother to spend precious time on succession planning?” A New Emphasis on Individual Development They have a good point. In keeping with the individual responsibility emphasis of the “new employment deal”, organizations are emphasizing self- development rather than management-driven succession and career development. Development plans are increasingly self-initiated, and individuals seek inputs and agreement from their managers. Multi-rater (360 degree) feedback has become commonplace; often using standardized instruments and developmental feedback processes. Executive coaches are used to provide confidential one-on-one guidance in addressing specific individual development needs. Individuals increasingly make their own training and education choices, from a wide array of available seminars, workshops, and self-study options. With job posting and ad hoc consideration of both internal and external candidates for positions, there is a feel of a “competitive labor market” within many organizations. Grooming? Hardly! Current emphasis is on developing a pool of talent relative to preferred competencies – usually representing a set of related or jobs. By nurturing development of a wide and deep talent pool, capable candidates will be available. Planned job rotation is less common even though broader experience is more important. A large company was regarded as a model for its rigorous development of general manager candidates through assignments in two countries, two businesses, and two functions. I have been informed that they have not been doing this for some because of the decentralization of the company (hello, silos!), lean staffing, and high cost of relocations. While external recruiting is increasingly relied upon, it entails increasing risk. Companies aggressively compete for quality candidates in tight labor markets. It is difficult to assess the actual capabilities of candidates and to match these with requirements. Further, external hires often find entry and adaptation difficult, including fitting into the executive team. Recruited executives often bring other managers with them, and other management approaches and cultures, which slow assimilation. When recruiting among companies intensifies, there is also increased risk of losing valued talent, especially high-talent mid-level managers (3- 10 years experience). Retention of key managers is crucial, especially after years of investment in their development. Rarely do companies weigh the cost of losing and then replacing executives. An attitude prevails that “no management job ever goes unfilled”. Re-inventing Succession Planning Some companies believe they can build a competitive advantage through the superior development of their leadership talent. Successful execution of strategies requires that each business have individuals with the competencies critical for effective future business performance in each and every leadership role. Global competition, aggressive business strategies, and rapid change are increasing the demand for capable executives. Accordingly, CEOs expect their business unit executives to consider carefully their management talent requirements, relative to changing business needs, and address them through appropriate actions. Maybe the label “succession planning” is a barrier to shaping new expectations. How about Leadership Development Planning, or Executive Resource Planning? One of my favorites is Leadership Depth Assurance. Let’s call it what it is, or what our top management prefers. For many, Management Succession Planning is the term they still know and like. It is the substance of the process that matters. While there is a wide range of practices, large companies today typically require some form of documented planning process for managing the development of leadership talent – within business units and across the business units. The process should not focus on traditional, position-by- position slates of succession candidates; rather, it should ensure that changing business requirements for talent are in some way being addressed effectively. Executives often still share information on key candidates – to discuss their strengths and weaknesses and consider their future assignments. At any given management level, no more than fifty candidates should be reviewed as a talent pool. There may no longer be annual succession review “retreats”, but business unit executives are accountable for the identification and assessment of talent relative to future needs, rigorous development of this talent, and achievement of measurable results – most notably the staffing of management roles with capable talent. Ideally, implementation of the process and results achieved are tracked as part of business performance, integrated with other executive performance accountabilities. Specific leadership development subjects are included in regular senior management meetings throughout the year. However, an intensive discussion once or twice a year can’t hurt, if it is focused on relevant topics (see Exhibit One). Many business unit executives are content to be accountable for developing (and keeping) their own talent. However, value is added by a company-wide process. Most notably, there are the opportunities provided for development across business units, functions, and regions (surfacing talent rather than protecting it within business units). There is the potential for aligning roles and capabilities with broader company strategic objectives, values, and principles. There are opportunities to accelerate development through programs and projects across business units. There is also the value of weighing and comparing the quality of talent across units, encouraging the highest standards to be applied. Of course, there is the prospect of grooming individuals for succession (yes, succession) to senior management roles, avoiding the temptation to recruit externally. New Spin on Practices Among leading companies, succession planning guides actions to enhance the quality of the leadership talent pool relative to business requirements. Through the planning process executives are addressing such changes in leadership development as: Accelerating learning through rapid, substantive assignments in multiple functions and businesses (using job vacancies for development purposes, creating opportunities through reassignments, opening up blocked development positions). Tailoring assignments to match individual needs and specific business needs (e.g., adapting job content/responsibilities and filling positions for developmental purposes) Building global perspective early in careers through training, projects, and work experience Identifying individual aptitude for working in management teams and developing team work capabilities Ensuring more rapid, more effective implementation of job-related learning and development by including development objectives in performance accountabilities Customizing management education and training to relevant, current business issues and priorities and to the specific development needs of participating managers Comparing internal candidates with best available external candidates Recruiting talent one level below key positions, to build the talent needed in the two-to-five year time frame (not immediate, not long-term) Providing wider pay ranges and more flexible total compensation so as to attract and retain top talent. As we move into the 21st century, we will certainly develop and apply new approaches for developing leaders. Do we need traditional succession planning? Maybe not, but we need something like it to enable our executives to take the steps required to ensure that each business unit has the needed talent and is effectively developing future leadership talent. A planning and review process provides a basis for defining company expectations and holding executives accountable for meeting them. What is your experience? What are your views? Exhibit One Topics for Succession Planning Discussions Future Requirements What are the few distinctive leadership capabilities that will enable to implement our business strategy effectively? (And more effectively than our competitors?) Which competencies are different from today? How many and what kinds of managers will be required to implement our business strategy (resulting from expansion, new products or markets, globalization, new organizational structures and roles, or new ways of doing business)? What will be the management staffing needs driven by attrition and internal movement? What are our objectives regarding diversity in management (women, people of color, and international talent)? Development of Talent Do we have the talent across the organization that will match these requirements (pools of talent, including long-term high potentials -- not individual position successors)? Are development plans are in place to build needed capabilities and to provide the job experiences, education, and other learning experiences individuals need? Have development plans been executed? Have candidates completed the planned education, project or job assignments, etc.? Are we effectively utilizing company-sponsored executive programs, external university programs, and other resources to support leadership development? Results Achieved Have our managers demonstrated the new required capabilities? (What have they learned and what have they applied?) Are we retaining our critical talent? Are we recruiting talent that brings distinctive capabilities to the organization not available internally?
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